SHANGHAI, July 21 (Reuters) - China's moves to liberalise
its currency have been courageous given the economic risks, and
next areas for reform include land policy, state-owned
industries and taxation, the official Xinhua news service said
in a commentary published on Sunday.

The news agency criticised Western politicians who have
accused China of keeping its currency artificially low for
ignoring the intricacy of the issue even while manipulating
their own currencies.

"Tens of thousands of low-end manufacturers operating at a
low profit margin have had to take a significant loss over a
stronger RMB yuan," Xinhua said in the commentary, using the
initials for renminbi, the official name of the currency.

"The world is awash with easy money from the United States
and Japan, which seeks higher returns from emerging economies,
including China. Hot money flows in and out of China could
paralyse the country's macroeconomic policy tools."

China has had to balance the benefits from a freer currency,
including curbing inflation and speculative flows, against the
risk of severe economic shock such reforms could bring, it said.

"To allow more flexibility for China's yuan is easier said
than done."

The commentary highlighted the recent decision by the
People's Bank of China to scrap the floor on lending rates,
announced on Friday, as one in a sequence of steps to continue
to reform the way credit is allocated and risk priced in the
world's second-largest economy.

"China's financial reform cannot be done overnight; yet it
has no way back."

While financial reform was critical, it must be accompanied
by reforms in other areas of the economy, including "land, state
monopoly, and fiscal policies", Xinhua said.

Finance Minister Lou Jiwei was quoted in a Xinhua interview
published late on Saturday saying that China is looking to
business tax reform and the easing of paperwork requirements to
help stimulate growth and sustain profitability.